The Death of the Credit Card Economy

Slate ^ | August 30, 2008 | Daniel Gross

[elmer fudd]

It’s a false analogy. So the card fees cost $427 a year, but what do they save? The cards are faster and more efficient than checks, so stores, banks, etc... can hire fewer people and save money in that way not to mention not having to deal with bounced checks or waiting for a week for a check to clear.

[OCC]

If you maxed out your cards and made the minimum payment each month, they would probably have increased your credit limit to $25,000!

[Zeppelin]

If you maxed out your cards and made the minimum payment each month, they would probably have increased your credit limit to $25,000!

I know, right?!?

I have a friend who was around $9,000 in debt on his credit cards alone, and he made all the minimum payments...but he would brag about his $30,000 credit line (on a single card), which he called "good credit." I told him that the credit card companies may classify that as "good credit," but that's only b/c they're making a very sweet yield off of him!

I tried to explain to him that "good credit" should mean that (barring any extenuating cirmcumstances) you are not paying interest to anyone, or at least paying a lower interest than an investment of that cash could yield; for example, buying a car and, instead of paying in cash, investing the $20K and making the minimum payments, financed at a rate lower than a high-yield CD, or other investment., and so on and so on.

He disagreed.